Since the first of the year, I’ve been hell bent on paying off all of my debt. I’ll take odd jobs, sell things I don’t use and I’ve even turned in holiday gift cards for cash. I’ll then take that money and put it towards my credit card bills. I’ve paid off over $2,000 but I’ve still got a long way to go.
Here’s my problem — I’m trying hard to pay off debt in a couple months, debt that’s taken years and years to accumulate. I’ve had one of my credit cards since 1994. That’s 12 years of purchases that can’t be erased in a couple months. According to this article on Moneyning, I’m probably better off going the slow route to debt reduction.
The author explains that a person can definitely be successful taking an aggressive approach to debt reduction, but it’s also important to consider whether or not that is the best approach for the situation. He compares debt reduction to weight reduction and explains that crash dieting, much like crash debt reducing, might not be the best long-term solution.
My weight used to yo-yo (but continue to move ever-higher) because I’d tackle those 10 or 15 pounds aggressively to reach a desired target. I’d spend six to eight weeks depriving myself and exercising more than usual. Once I hit that target, I’d slowly return to old habits. That’s because the dramatic changes in my eating and exercise habits were unsustainable.
The same might be true of your finances. You can deprive yourself of everything you like to spend money on for a short period of time, but are you really tackling the root of the problem? My cyclical weight gain wasn’t my problem — it was a symptom of my lack of good habits. You might fall into the same trap when you pay down debt very quickly.
I’ll use myself as an example — the wife and I paid off a joint credit card that had over $5000 on it using some savings and a tax return. A month later, we put the entire payment for our kid’s summer camp ($1300) on the card. Now I can admit — bad move.
Once I stopped crash dieting, I started making smaller, more sustainable changes. It took longer to reach my goal weight, but it was easier to maintain that weight once I reached it. Incremental changes to my nutrition and exercise habits stuck. The same approach can work when it comes to debt. Focus on changing your money habits in ways that you can maintain for the long haul. Then tackle your debt.
Small changes. Small payments. Debt reduction is a marathon and not a sprint.